David Farnsworth is a principal with the Regulatory Assistance Project.
I was at a National Association of Regulatory Utility Commissioners meeting recently, at a breakfast panel where electric vehicle advocates, electric truck manufacturers and utility companies all told utility regulators that they need to approve the rollout of charging infrastructure much more quickly than their current pace.
What struck me is that, while the focus on regulators is probably correct, it is critical for regulators to be properly enabled to review and approve EV infrastructure proposals. And it is the job of proponents to provide that support, that comfort.
What does the EPA Phase 3 Truck rule have to do with utility regulators?
“Build it and they will come” works in the movies, but is not an approach that works in the utility regulatory world. Utility company charging proposals need to provide regulators with assurances that infrastructure investments are needed, and that it is reasonable to expect that they will be used and useful and provide benefits over time.
The U.S. Environmental Protection Agency’s Phase 3 draft rule proposes more ambitious emissions standards for heavy-duty vehicles for model year 2027 and later. It applies to delivery trucks, refuse haulers, transit, shuttle and school buses, and tractors such as day cabs and sleeper cabs on tractor-trailer trucks.
As proposed, the EPA’s rule sets out tangible targets for truck manufacturers to meet. Like any other manufacturer, truck manufacturers will need to inform their utility companies of their energy needs (in this case, fuel, i.e., electricity for their trucks) and to motivate them to get underway to provide the charging infrastructure that will meet those needs and enable the support for the sale of those trucks.
Utilities, in turn, will be able to go to regulators and show them that because of this new emissions standard there is, in fact, a compelling need for charging infrastructure. Rather than proposing a “build it and they will come” scenario, utilities will be able to make that demonstration, and utility regulators will have a clearer basis for approving the request.
If, on the other hand, the EPA does not impose the requirements in its draft, then the certainty that additional charging infrastructure demand driven by this rule produces will disappear. The tangible need that manufacturers would provide utility companies evaporates. And the emission reduction benefits, the billions in health benefits from fewer premature deaths, respiratory and cardiovascular illnesses, as well as the billions in reduced reliance on oil imports all disappear.
Not a ‘chicken or egg’ problem
Ironically, while some are arguing at NARUC for regulators to step up, other truck manufacturers and their trade groups are arguing for a weakening of EPA’s Phase 3 rule. For example, the Clean Freight Coalition and National Automobile Owners Association argue that the United States cannot electrify transportation without first having charging infrastructure. These observations, of course, frame the classic “chicken or egg” dilemma. But hopefully the EPA will recognize here that this is not a chicken or egg thing. Instead, it’s a “we need to go first” thing.
What does that mean and why is that important? It means that with enforceable truck electrification goals in place, the future becomes less speculative. By adopting this rule, the EPA provides a more tangible basis upon which utilities can base proposals and regulators can make decisions. Consequently, utility regulators will have greater confidence to review large investments in electric truck charging infrastructure, and increase the likelihood that approvals move more quickly.
Back to the NARUC breakfast panel. The EPA adopting its Phase 3 proposed rule is certainly not the only thing that utilities can do to drive greater support for their heavy-duty charging proposals. Michigan’s DTE Energy has provided a very useful example of other steps that utilities can take to better qualify their heavy-duty charging proposals. In the context of a recent rate case decided in November 2022, in which the Michigan Public Service Commission approved DTE’s charging hub proposal, the company provided the following assurances:
- Soliciting letters of support from commercial and industrial customers located within 3 miles of their hub;
- Siting the hub in a Clean Air Act nonattainment area to demonstrate reduced emissions impacts from criteria pollutants;
- Ensuring that there are a minimum of 1,500 electric vehicles registered within 5 miles of the site; and
- Siting the hub close enough to a highway that meets thresholds for daily traffic (to meet local traffic needs as well as “opportunity charging” for trucks on the highway).
That said, the EPA’s adoption of the Phase 3 rule as drafted will provide a sizable contribution to solving the challenge of electrifying America’s heavy-duty vehicles. Regulation that ensures the protection of public health and the environment begins with the EPA setting standards. With this clear direction, states can proceed to meet those standards in ways that work best for them and their citizens.